By STEPHEN BARTLETT
MALONE –– Court records detail a lengthy legal battle that plays out like a shell game as Malone village officials pursue the restoration or the demolition of the Hotel Flanagan and Lashomb buildings, dangerous eyesores in downtown Malone.
Slights of hand present a dizzying array of explanations as to who owns the condemned properties, though no matter which cup you look under, it appears Barry Steinberg’s the go-to man when collecting money. But when legal action threatens the Long Island-based developer, he can’t recall his responsibilities when investing money to create Stone Mountain Prime, which owns the Flanagan and Lashomb buildings.
Now, all bets are in, with a state Supreme Court judge set to rule on this latest round. And the biggest gamble seems to be whether the downtown buildings will fall to the ground before the players reach the endgame.
Supreme Court Justice John T. Ellis is scheduled to hold a hearing on Friday on an effort by Steinberg to have the village’s legal action against him dismissed. But he has also scheduled a jury trial on the matter for Aug. 10.
“This building has been sitting for 20-something years, and it is frustrating because we are in limbo,” said Malone Village Mayor Andrea Dumas. “It has been held up with attorneys and, so far, empty promises.”
Fire tore through the Flanagan more than 20 years ago. It’s sat vacant ever since.
Court filings indicate Steinberg was approached about investing in the hotel in 2006 or 2007. He testified in a deposition in early 2018 that he couldn’t recall what his involvement entailed, just that he was a 50/50 investor in Stone Mountain Prime.
Steinberg claimed then he can’t remember what he eats for lunch and that he signed in error any paperwork indicating he’s a “member” of Stone Mountain Prime, which is apparently defunct and unfunded yet technically still operating in New York state. “Gone,” “closed,” “shelled,” and “no more” were the words Steinberg used in his 2018 deposition that ended when he refused to answer questions about state and federal tax filings pertaining to Stone Mountain Prime.
Stone Mountain Prime assumed ownership of the properties on Nov. 6, 2009, by way of foreclosure sale and auction. Malone Village Attorney Kevin Nichols has filed evidence showing that in 2008 Steinberg presented himself as a managing member of Stone Mountain Prime to begin the foreclosure action. Nichols further stated Steinberg indicated he was president of Stone Mountain Prime when granting permission for the August 2015 inspections that found both buildings to be unsafe and in violation of building codes.
In May 2017, trustees voted to begin condemnation proceedings on the buildings. Steinberg failed to respond to orders by the village to attend hearings to explain why the structures should not be demolished.
After a Sept. 18, 2017, hearing to determine code compliance that no one from Stone Mountain Prime attended, trustees directed Steinberg to make safe or demolish the structures.
Also in 2017, Frank Cositore and Bob Hest of Hotel Flanagan Inc., who had been working since the early 2000s to rehabilitate the hotel, said they’d have funding to purchase the Flanagan from Steinberg and begin renovations. Trustees were unconvinced, as Cositore –– who’d done some work on the building –– had been claiming since at least 2010 that financing was around the corner. They continued with condemnation proceedings on the 103-year-old hotel.
Malone-based Attorney Bryan Hughes, while imploring the village to consider the request by Cositore and Hest, suggested that any action the village took against Steinberg would be futile and result in years of court battles.
“He will dig in,” Hughes said of Steinberg.
As legal maneuverings continued, Nichols said Steinberg “has not responded in any meaningful fashion” to the village’s actions, and “continues to ignore the problem.” Steinberg did act in 2017, but it was by filing a lawsuit against the village to block any action against the properties, claiming Malone lacked the authority to carry forth with those efforts.
Plattsburgh-based Attorney Justin Meyer demanded Steinberg’s name be removed from any proceedings and that he be absolved of any responsibility in the matter. Stone Mountain Prime owned the buildings, Meyer said, and Steinberg was not involved in its operation in his individual capacity. The village did not comply, and Steinberg filed notice that he intended to sue the village for $1 million, though that never happened.
Nichols told the judge that Steinberg uses his status to make monies on the properties but when legal action is taken against him, he suddenly is no longer responsible for the properties. For example, Steinberg indicated he was a managing member of Stone Mountain Prime when he brought foreclosure action against Cositore in 2008. And in 2013, Cositore referred to Steinberg as “president,” “leader,” and the “800 lb gorilla” of Stone Mountain Prime.
As the legal war waged, village officials were forced in 2019 to close off a portion of sidewalk on East Main and Elm streets after bricks fell from the back wall of the Lashomb building,and village officials feared the front of the building abutting the sidewalk could soon follow suit, creating a hazardous situation for pedestrians.
In September of last year, Nichols claimed the Flanagan and Lashomb buildings were unsafe, violated village and state codes and should be repaired, secured or demolished. Nichols argued that Steinberg’s willful neglect and refusal to address the matter made him criminally liable.
Steinberg had consistently presented himself as the owner of the buildings and an owner and member of Stone Mountain Prime, Nichols stated, but began distancing himself from any responsibility once legal action was taken. Yet Steinberg was involved with Stone Mountain Capital and Stone Mountain Funding.
“His intent to use these corporations for inequitable and fraudulent practices is evidenced by his underfunding of Prime and the creation of multiple like named entities that he seemingly uses interchangeably,” former Mayor Joseph Riccio is quoted as saying in court filings.
On Dec. 2, Meyer, on behalf of Stone Mountain Prime and Steinberg, filed a motion for summary judgement, saying there were no questions of facts in the case and a trial was not necessary. He further filed for a dismissal because the village failed to comply to discovery demands in a timely manner. The village was supposed to provide materials to Meyer by Nov. 28.
Meyer admitted that Steinberg owns several properties under names that include some variation of Stone Mountain, but said his client is not a “member” of Stone Mountain Prime.
Nichols filed an opposition to Meyer’s motions on Dec. 31, pointing out that in a November 2018 email, Steinberg, while pursuing financial gains, told an individual seeking proof he owns the property, “Do not have it so take my word that the land is mine or not, you pick.” Nichols also referred to a rental document in which Steinberg signed as the owner of the Flanagan property, as well as a $500 check (which Steinberg endorsed) paid to the developer for rental fees.
Nichols contends the village neglected to respond to discovery demands in a timely manner because they were under the impression the war was over.
Emails reveal a deal – articulated by Hughes - in which the village would end any action against Stone Mountain Prime and Steinberg if Cositore demonstrated he had $2 million in an account to repair or demolish the Flanagan and Lashomb buildings, both of which would be transferred to Cositore.
“I had hoped to at least have our agreement in place before asking the funder to advance any money, but was able to convince the funder to send $2 million in a banking facility requiring my signature to show good faith. It will remain on deposit until we’re ready to pay Stone Mountain and its taxes, receive the deed and exchange releases,” Hughes wrote in an email to Nichols.
“I had a good faith belief that Mr. Hughes would deliver on this money and thereby settle the entire matter,” stated Nichols. “I took Mr Hughes on his word and therefore did not timely respond to the notice to admit nor to the other discover demands … Given the confusing and contrary assertions made by Barry Steinberg, it would be an injustice to the village of Malone to grant this summary judgement motion…”
A hearing on the motion to dismiss is scheduled for Friday.
“Until we see money in the bank, I don’t believe anything that is going on,” Dumas told The Telegram. “This has been going on for years, and not just with this board. We are not waiting any longer. We are tired of using taxpayer money on issues that should have been dealt with years ago.
“It’s now in the judge’s hands.”